Obama vs. Keystone.....again.

U.S. Senate Republican Leader Mitch McConnell made the following statement on the Senate floor Thursday regarding efforts by the President to lobby Democrat Senators against Senator Hoeven's amendment on the Keystone XL Pipeline:

“Last night the two parties reached agreement on amendments to the Highway Bill. I’m happy to report that there are a number of strong job creating measures in the mix. One that stands out is Senator Hoeven’s amendment on the Keystone XL Pipeline.

“Most Americans strongly support building this pipeline and the jobs that would come with it. And it’s incomprehensible to me that the President of the United States is lobbying against it.

“There’s a report this morning that President Obama is personally making phone calls to Democrat Senators he thinks might vote for this amendment. He’s asking them not to. And, frankly, it’s hard to even comprehend how out of touch he is on this issue.

“I mean, think about it: at a moment when millions are out of work, gas prices are skyrocketing and the Middle East is in turmoil, we’ve got a president who’s up making phone calls trying to block a pipeline here at home. It’s unbelievable.

“What we’re seeing in Congress this week is a study in contrasts.

“On the one hand you’ve got a Republican-controlled House that’s about to pass a bipartisan jobs bill that would help entrepreneurs and innovators by getting Washington out of the way. And today we’ve got a Democratic-controlled Senate trying to line up votes against amendments that would create jobs—and a President lobbying against the biggest one.

“We’ve got an opportunity to work together to create jobs. We can do that with these amendments. And we can do that by taking up the bipartisan jobs bill the House will pass later today.

“Let me just say a word about that. The bipartisan jobs bill the House will pass later today is supported by the President. It is ready to go, and I hope that once it gets over to the Senate we'll simply take it up and pass it.

“It's an example of a measure that is supported by Republicans and Democrats and the President that we believe will clear the House with a very large majority. I think the sooner we pass that here in the Senate and send it down to the President for signature, the better.

“With that, Mr. President, I yield the floor.”(1)

Upon Further Review

Many talking heads, pundits and media-types put forth the proposition that Obama is preventing oil independence, etc., and/or he is siding with environmentalists by opposing Keystone. Fair enough arguments.

What one doesn't seem to experience with the media is this public choice theory proposition: since Obama and his ilk built a massive network of crony capitalist green energy, a massive political constituency building exercise through use of taxpayer dollars, does not Obama have a vested interest to protect [reduce/eliminate competition] regarding such a purposely built massive network of crony capitalist green energy concerns? That is, given the network of constituency building exercises, Obama is merely acting rational to protect the purposely built network of crony capitalists.

Now consider this political economy proposition:

Many politicos with a vested interest in the crony capitalism regarding alternative energy also have a vested interest in environmentalists. As the formula goes, the politico through the mechanism of government uses taxpayer dollars to build a political constituency. In this particular case the constituencies are associated in that the crony capitalist of alternative energy “appear” to also be the champion of the environmentalist. Therefore the politico enabler receives a double constituency building outcome through the awarding of taxpayer dollars.

Notes:

(1) McConnell: President Lobbying Against Keystone XL Pipeline Jobs, Real Clear Politics, 03/08/2012

About Those Taxpayer Subsidies for Green Energy: Germany and the Dutch Pull the Plug

“COPENHAGEN – One of the world’s biggest green-energy public-policy experiments is coming to a bitter end in Germany, with important lessons for policymakers elsewhere.

Germany once prided itself on being the “photovoltaic world champion”, doling out generous subsidies – totalling more than $130 billion, according to research from Germany’s Ruhr University – to citizens to invest in solar energy. But now the German government is vowing to cut the subsidies sooner than planned, and to phase out support over the next five years. What went wrong?

There is a fundamental problem with subsidizing inefficient green technology: it is affordable only if it is done in tiny, tokenistic amounts. Using the government’s generous subsidies, Germans installed 7.5 gigawatts of photovoltaic (PV) capacity last year, more than double what the government had deemed “acceptable.” It is estimated that this increase alone will lead to a $260 hike in the average consumer’s annual power bill.” – Germany’s Sunshine Daydream, Project Syndicate, Bjørn Lomborg (1)

“The nation known for its iconic windmills is throwing in the towel on offshore wind power, as Dutch officials have determined the Netherlands can no longer afford large-scale subsidies for expensive wind turbines that cannot produce electricity at economically competitive prices.

 The decision is a powerful blow against renewable power advocates who have long asserted Holland proves renewable power can be practical and economical.” - Dutch Pull the Plug on Offshore Wind Subsidies, Heartlander, D. Brady Nelson (2)

Setting aside one’s political views in regards to taxpayer subsidies and environmentalism, one must examine the situation of the two way cost where the taxpayer/consumer subsidizes his/her own price increase. That is to say, when green energy is subsidized by the taxpayer a first cost is incurred. However, the green energy firm which has already collected a taxpayer subsidy goes one step further and lobbies for their energy output to be purchased by utilities [purchase is mandated/required]. The utility is then forced to buy the supply of green energy output at above market green energy output price (other sources are available at lower costs but the utility’s freedom to choose inputs has been curtailed). The increased cost is then passed onto the consumer. Therefore the taxpayer/consumer has subsidized their own price increase.

Upon further review, the subsidization of one’s own price increase is not the end of the story as the value associated with the subsidization and consequential price increase purposely appear somewhere/elsewhere. That is to say, beyond tax dollars of taxpayer A being spent to increase the costs to the same taxpayer A when acting as a consumer, the taxpayer subsidy and increase cost accrues as a benefit to an exogenous party(s).  In other words, beyond the political dupery of having the taxpayer subsidize his/her own increased cost, the cost becomes a value to another party or parties.

Before one examines what party or parties benefit from the purposeful political dupery one needs to consider third party intervention. That is, the entire dupery process of the taxpayer subsidizing his/her own increased cost, such dupery cannot occur unless a third party directs such dupery. The third party dupery enabler is the politico.

Hence the politico-dupery-enabler with taxpayer dollars in hand [subsidy] and the mandated price increase in hand, bestows the value of the taxpayer subsidy and subsequent increased cost, the value thereof, on another party. This exogenous party that receives the value is a process known as dependent political constituency building through tax payer dollars. That is, the politico bestows the value by building a voting block constituency that is dependent on the politico funnelling now and in the future, the value items mentioned above. Stated alternatively, the values of the subsidy and the mandated purchase become the dollar conduit that allows the politico to build and subsequently rule the dependent political constituency.

Meanwhile, a final step needs examined once the politico is satisfied he/she has built a dependent politico constituency at no cost to themselves and with all cost borne by the taxpayer/consumer. The “winner” [picking winners and losers] is the party with the value bestowed upon them. This remote third party gains the value not through competition, not through innovation creating a low cost and valued item by the market place; the value was gained through politico enablers aka crony capitalism.

H/T: Carpe Diem and Mark Perry

Notes:

(1) http://www.project-syndicate.org/commentary/lomborg81/English


(2) http://news.heartland.org/newspaper-article/2011/12/30/dutch-pull-plug-offshore-wind-subsidies

Being Green -or- Merely Wearing Green Shaded Glasses: Conundrums, Product Substitution Panacea, and the Prius Fallacy

“A favorite trick of people who consider themselves friends of the environment is reframing luxury consumption preferences as gifts to humanity. A new car, a solar-powered swimming-pool heater, a 200-mile-an-hour train that makes intercity travel more pleasant and less expensive, better-tasting tomatoes—these are the sacrifices we're prepared to make for the future of the planet.

Our capacity for self-deception can be breathtaking. In 2010, a forward-thinking friend of mine took me for a ride in a Ford Fusion, a gas-electric hybrid that gets more miles per gallon than comparable cars with conventional engines. His dashboard fuel gauge filled with images of intertwining green foliage, a symbolic representation of the environmental benefits we were apparently dispensing from the tailpipe as we aimlessly drove around.

I felt a twinge of idiotic virtue while in that car, as I also do when I leave an especially large pile of cans, bottles and newspapers at the end of my driveway for the recycling truck. Like many concerned Americans, I'm susceptible to the Prius Fallacy: a belief that switching to an ostensibly more benign form of consumption turns consumption itself into a boon for the environment.” - It’s Too Easy Being Green, David Owen, WSJ, 02/04/2012

Link to the entire article appears below:

http://online.wsj.com/article/SB10001424052970203889904577198922867850002.html

Not In My Back Yard (NIMBY): Residential Solar Panel Arrays

‘I was reminded of this when I read a recent article in ClimateWire (sub. req.), by Lacey Johnson, “Boom in Solar Panels injects NIMBY Battles into Neighborhoods.”

The story begins with Barbara Katz, whose hilltop home in historic north Baltimore, amid roaming wildlife, was threatened by her neighbor’s plan to install an 600-panel solar array. Johnson reports:


“My initial reaction was, ‘Oh my gosh, this is going to be an eyesore,’” remembers Katz, who was confronted by a plan for more than 600 ground-based solar panels on her neighbors’ lawn. “No one would want this in their backyard. It looks like it’s an industrial park.” ‘ - Robert Bradley, Jr., Master Resource, 01/27/2012


Link to the entire article appears below:

http://www.masterresource.org/2012/01/micro-solar-nimbyism/

Solyndra Inc., Beacon Power, and now Ener1: Green Cronyism and Bankruptcy - Your Tax Dollar Working to Pick Losers!

“The parent company of an electric car battery maker that received a $118 million grant from the Obama administration filed for Chapter 11 bankruptcy protection on Thursday.

New York-based Ener1 said it has been affected by competition from China and other countries.

Ener1 subsidiary EnerDel received a $118 million stimulus grant from the Energy Department in 2009, and Vice President Joe Biden visited the company's new battery plant in Indiana last year.

Ener1 is the third company to seek bankruptcy protection after receiving assistance from the Energy Department under the economic stimulus law. California solar panel maker Solyndra Inc. and Beacon Power, a Massachusetts energy-storage firm, declared bankruptcy last year. Solyndra received a $528 million federal loan, while Beacon Power got a $43 million loan guarantee.” -Fox News, 01/27/2012

Below is a link to the entire article which includes video.


http://www.foxnews.com/politics/2012/01/27/parent-obama-backed-battery-maker-goes-bankrupt/

Pawns and Politics

Keystone Pipeline Decision: Environmentalism or Crony Capitalism?

This week Mr. Obama put off a decision on the Keystone pipeline until after the 11/2012 presidential election. That somehow, some way unresolved environmental items existed.

‘Obama said in a statement that he supports delaying a decision.

“Because this permit decision could affect the health and safety of the American people as well as the environment, and because a number of concerns have been raised through a public process, we should take the time to ensure that all questions are properly addressed and all the potential impacts are properly understood,” Obama said.

“The final decision should be guided by an open, transparent process that is informed by the best available science and the voices of the American people. At the same time, my administration will build on the unprecedented progress we’ve made towards strengthening our nation’s energy security, from responsibly expanding domestic oil and gas production to nearly doubling the fuel efficiency of our cars and trucks, to continued progress in the development of a clean energy economy."‘ (1)



Put aside for a moment the politics of environmentalism. Also put aside drill, drill, drill politics for a moment. View the Keystone decision in crony capitalism terms. More specifically think in “crony capitalism market terms“:


(1) crony capitalism, in and of itself , is affected by market forces,


(1a) one market force is: although economic rent seekers want to insulate themselves from markets, competition, and actual profitable productive endeavors, that in fact crony capitalist compete among themselves for taxpayer dollars e.g. wind vs. solar, solar vs. bio-fuels, wind vs. ethanol, and so on.


(1b) a second market force phenomena is the unsubsidized entities or minor subsidized entities [in this particular case coal, natural gas, and oil] are constantly butting up against the wall of insulation crony capitalists crave/enjoy. (2) (3)


Was/is the Keystone decision merely Obama and his ilk’s purposefully protecting their purposely created subsidized crony capitalist market of wind, solar, bio-fuels, and ethanol against the much less subsidized and more free market oriented energy producing items?


Did the crony capitalist competitors of wind, solar, ethanol and bio-fuels come together to oppose Keystone to protect their greater crony market (regardless of internal crony competition for tax dollars)?


Now put this proposition into action. If Keystone was approved you have twenty-some thousand well paying jobs immediately created with say one hundred thousand spin off jobs created in increments over time [some estimates of job creation are higher]. The energy market becomes more competitive as less costly oil can be delivered to refineries. Hence we have a no or low subsidy item creating actual profitable production and intensifying competition. The entire phenomena of Keystone puts pressure on the highly subsidized, non-productive endeavors of wind, solar, bio-fuels, and ethanol. In the main, Keystone is about competition.


The other item is the actual long term private sector jobs created by Keystone for all to see vs. the declining employment, bankruptcies, etc. of the subsidized wind, solar, bio-fuel, and ethanol propositions.


Therefore Keystone’s delay may not be about environmentalism,  it may be about crony capitalism. By politicos through the mechanism of government distorting markets, benefits accrue to the crony capitalist. Stated alternatively , limiting competition rewards the purposely built crony capitalism constituency base of the politico.

Note: its long been lamented that the Department of Energy (DOE) in conjunction with the Environmental Protection Agency (EPA) have never come up with a low cost energy plan. That is, after decades and decades where is the “energy plan”? One might ponder that the lack of an energy plan may if fact be purposeful. That no plan exists as the DOE and EPA are merely conduits, pipelines if you will, for crony capitalism within the energy sector.

Notes:

(1) Obama punts Keystone XL pipeline, Politico, 11/10/2100 http://www.politico.com/news/stories/1111/68089.html

(2) Crony Capitalism
http://dangerousintersection.org/2011/10/16/crony-capitalism-defined-by-a-libertarian/

http://www.answers.com/topic/crony-capitalism

(3) Economic Rent Seekers

http://www.econlib.org/library/Enc/RentSeeking.html

No U.S. Energy Plan? -Or- Shadow Political Energy Plan of Very Comprehensive Design?

Those that debate U.S. energy production and energy delivery have common ground in pointing out that U.S. policy makers [politicos] have no comprehensive plan for energy. Since the oil shocks of the 1970’s, for thirty plus years, no “comprehensive energy plan” has come forth from policy makers.

Contrary to popular opinion, politicos do in fact have a very comprehensive plan. It’s a political plan for energy of very comprehensive design.

Starting with FDR and his administration and minions replacing private electric production and creating “public utilities” [legal monopoly] through current subsidies, tax preferences, mandatory purchase agreements, price fixing schemes, threat of tax if profits are too high, etc., etc. a comprehensive political energy policy has developed/evolved.

Where is this comprehensive plan? Why is it not bound in a four volume set so we can peruse the plan‘s intricacies, plan direction, plan cost, etc.? Because it lies in the shadows. A shadow politico plan if you will, that specializes in pandering to special interests for political constituency building purposes. Its an energy plan based on political constituency building through the mechanism of government and funded by taxpayer dollars.

Among the many, many flaws within the shadow politico energy program there exists one major and fatal flaw: taxpayer dollar subsidy. If politicos through the mechanism of government find that all subsidies for all energy sources are removed they will find their politically built constituencies through the use of taxpayer dollars suddenly dissolve.

Pundits, talking heads, and media types like to point out Big Oil. What about Big Wind and Big Solar? What about merely calling it “Big Energy Complex”.

If it is “Big Energy Complex” who is really the big and small within this complex regarding subsidies? The political framed argument coming from many is Big Oil. Is that true?

“So I ask the question: If wind has all these drawbacks, is a mature technology, and receives subsidies greater than any other form of energy per unit of actual energy produced, why are we subsidizing it with billions of dollars and not including it in [the energy subsidy] debate? Why are we talking about Big Oil and not talking about Big Wind?” -Senator Lamar Alexander

　

　
“Well, I am one Senator who is very intrigued with the idea of looking at all of the tax breaks in the tax code. There are currently about $1.2 trillion a year in what we call tax expenditures, and those are intended to be for tax breaks we think are desirable. I am ready to look at all of them and use the money to reduce the tax rate and/or reduce the Federal debt. But if we are going to talk about energy subsidies — tax subsidies — we ought to talk about all energy subsidies.”

Renewable vs. Fossil-energy Subsidies

Senator John Cornyn of Texas has asked the Congressional Research Service to do just this. It is an excellent study, and I commend Senator Cornyn for asking for it. This is some of what it finds: According to the report, fossil fuels contributed about 78 percent of our energy production in 2009 and received about 13 percent of the Federal tax support for energy.

However, during that same time 10.6 percent of our energy production was from renewables and 77.4 percent of our energy tax subsidies went to renewables. So if we are to compare the subsidy per unit of energy, the estimated federal support per million BTUs [or British Thermal Units] of fossil fuels was 4 cents, while support for renewables was $1.97 per million BTUs.

So, federal subsidies for renewables are almost 50 times as great per unit of energy as federal subsidies for fossil fuels. [But] this would be distorted because hydroelectric power is included within renewables. Most people think of renewables as ethanol, solar, or wind and those are the renewables that actually get the subsidies, while hydroelectric does not.

So, the federal taxpayer support for renewable energy is at least 50 times as great per unit of energy as compared with fossil fuel energy. So why aren’t we including subsidies for all renewables in our debate? Specifically, if we are talking about ‘Big Oil,’ why don’t we talk about ‘Big Wind?’ The Senate seems an appropriate place to talk about ‘Big Wind.’ (1)



The subsidies are in great peril of being removed. Why? Three items have come to the surface:


(a) one set of politicos want subsidies for oil companies removed in lieu of a windfall profits tax on oil companies,


(b) a subset of the group identified in (a) above and an exogenous group want subsidies for all energy companies removed,


(c)  subsidies in general are “discretionary” spending. With the U.S. Government now at $14.9 million of national debt, spending must be cut. Subsets of both groups (a) and (b) above and yet another exogenous group want to tackle the easier aspect of discretionary spending rather than entitlements. (2)


Those politicos that have championed subsidies and the inherent ability of the subsidy [taxpayer dollars] to reward special interests and hence lend to political constituency building will find some very nasty consequences in the reduction of “discretionary spending” and the consequential removal of subsidies:


(1) those politicos championing “subsidy” will easily be identifiable as they will quickly oppose removing all energy subsidies and want to retain the particular subsidy associated with their particular constituency building exercise,


(2) the price of energy from fossil fuel will rise marginally while renewables will rise many fold,


(3) the taxpayer-voter will suddenly have transparency regarding the comprehensive political energy plan,


(4) the consumer of energy will immediately have a true price signal regarding the cost of energy choices.


Notes


(1) Energy Subsidies and Big Wind: Sen. Alexander Sets the Record Straight (renewables 50x that of fossil fuels), Master Resource, http://www.masterresource.org/2011/05/big-wind-sen-alexander/

(2) http://www.usdebtclock.org/

68 Total Workers and 58 Million Dollars Later…..

“That would leave Evergreen with about 68 workers according to a head count listed in the bankruptcy filing“.

“Evergreen Solar Inc., the Massachusetts clean-energy company that received millions in state subsidies from the Patrick administration for an ill-fated Bay State factory, has filed for bankruptcy, listing $485.6 million in debt“.

“……….Patrick administration’s $58 million financial aid package, which supported Evergreen’s $450 million factory, a “waste” of money“.

“Shares of Evergreen, which are in danger of delisting from the Nasdaq Stock Market, plunged 57 percent today to 18 cents. The company launched in 1994 and went public in 2000.

The list of top creditors in today’s bankruptcy filing lists a $1.5 million debt to MassDevelopment, the quasi-public state economic development agency.”

The entire article appears in the link below: Evergreen Solar files for bankruptcy, plans asset sale - Herald.com

http://www.bostonherald.com/business/technology/general/view.bg?articleid=1358998&pos=breaking